In IWA authentication environments, clients using Windows 7 with IE 8 are being prompted to authenticate when browsing the Internet or when opening up a browser.

The following two KB articles are related to this issue, but do not completely resolve it:

• TECH241110 : The issue still occurs after implementing this solution.
• TECH242310 : This KB  resolves the issue, however it affects the reporting of the user browsing activities for the affected clients.

Because this is a browser issue, you cannot control this behavior from the ProxySG appliance. However, you can modify the settings on the affected Windows clients as follows:

Configure the Network security: Allow Local System to use computer identity for NTLM security policy setting to disable the Local System services that use Negotiate to use the computer identity when reverting to NTLM authentication (Local Security Policy > Security Settings > Local Policies > Security Options).

Microsoft article at link explains more on this setting.